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The company’s share price dipped sharply with the news, falling 7% to a near eight-year low, according to the BBC. HTC shares have fallen 44% in the past year, currently trading at their lowest level since 2005.

In the company’s outlook for the third quarter, HTC said it expects its operating margin to fall to between zero and minus 8% on revenues $1.7bn to $2bn.

The forecast is below analysts’ predictions of a margin of 2-4% and revenues around $2.4bn.

“Our overall gross margin has been affected by the relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products in the channel,” HTC said.

However, the company added that actions had been taken that were expected to bring an improvement in the fourth quarter.

HTC has lost market share to rivals such as Apple, Samsung, Huawei and ZTE and the company reported an 83% drop in net profit in the second quarter, compared with the same period a year ago.

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